Credit scores are the shorthand that banks use to make lending decisions. If your score is high, you get better terms for borrowing. If your scores are low you might not get a loan at all, or you'll have to pay interest rates that would make a loan shark blush.

First comes your credit report. Three credit reporting bureaus, Experian, Equifax and Transunion, independently gather information from landlords, government agencies, credit card issuers, and other creditors.

The reports are divided into four main sections, personal information, credit history, public records, and credit inquiries from the last two years. The results are given numerical weights, including on-time and late payments, income to debt ratios, too many credit inquiries, and more.

It's the total that generates the credit score using an algorithm by the Fair Isaac Corporation.

Bad reports, such as late payments, missed payments and defaults, judgments and liens can stay on your reports for seven to ten years. Even if you've paid what's due or released the liens, the report stays for years, but the score will improve if more negative data doesn't show up.

Credit scores range from 300 to 850. According to Bank of America, the average American's credit score is 692. Any scores under 620 could make it hard to get a mortgage, while anything above 700 is attractive to lenders.

To protect your scores, check your credit reports regularly. Sometimes, the reports are wrong or outdated. You can obtain free copies at AnnualCreditReport.com.

Put revolving credit payments on automatic debit from your checking account so you won't be late. Don't open too many credit cards, and don't close accounts that are good.

Use and pay off your credit quickly so you don't waste money on high interest payments. Be sure that your debt, including your mortgage is never more than 36-40% of your income.

Visit your lender with a copy of your credit reports and scores and ask if there's anything there that could prevent you from getting better rates.